PRE-ACTION CONDUCT
UNIT 3
Introduction
14-1
The Court of Appeal in Churchill v Merthyr Tydfil CBC [2023] EWCA Civ
1416 overturned Halsey v Milton Keynes General NHS Trust [2004] EWCA
Civ 576, which had been regarded as the leading case on alternative
dispute resolution (ADR) since 2004. In a landmark judgment, the Court of
Appeal held that the court could lawfully stay proceedings for, or order,
the parties to engage in an ADR process subject to the provisos that the
order made did not impair the very essence of the claimant’s right to
proceed to a judicial hearing, and was proportionate to achieving the
legitimate aim of settling the dispute fairly, quickly and at reasonable
cost. The judge in the court below had relied on well-known passages from
Halsey, but it was held that these were not part of the essential reasoning
in that case. Churchill is dealt with in further detail in para.14-7 below. It
should be noted that Churchill is not authority for the court having power
to mandate a binding ADR process. Such a process, like arbitration, would
not satisfy the caveats on the power articulated by the Court of Appeal.
The power of the court to order ADR–Churchill
14-11
The Master of the Rolls, in delivering the judgment of the Court of Appeal
in Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416, made it clear that
the court can in fact order what he described as non-court-based dispute
resolution. Before the appeal was heard it was apparent that Halsey was
likely to be reviewed by the Court of Appeal, and seven organisations,
including The Law Society, The Bar Council and several ADR organisations,
intervened.
When Japanese knotweed encroached onto his property Mr Churchill
commenced proceedings against the local council who owned the
neighbouring land. The Council sought to stay proceedings on the grounds
that he had not used its corporate complaints procedure. The Deputy
District Judge dismissed the application for a stay holding that he was
bound to follow Dyson LJ’s statement in Halsey that:
“to oblige truly unwilling parties to refer their disputes to mediation would
be to impose an unacceptable obstruction on their right of access to the
court”
,. The fact that the case concerned an internal complaints procedure,
rather than an ADR procedure involving a third party neutral such as a
mediator, may be the reason why the judgment refers to the court being
able to order a “non-court-based dispute resolution procedure” rather than
“ADR”.
The Court of Appeal held that the court could lawfully stay proceedings
for, or order, the parties to engage in a non-court-based dispute resolution
process subject to these provisos: that the order made did not impair the
very essence of the claimant’s right to proceed to a judicial hearing and
was proportionate to achieving the legitimate aim of settling the dispute
fairly, quickly and at reasonable cost. The Master of the Rolls reasoned
that the passages from Dyson LJ’s judgment in Halsey which had been
relied upon by the Deputy District Judge were not part of the essential
reasoning in that case (were obiter) and had not bound him to dismiss the
Council’s stay application.
The Court of Appeal, however, did not lay down fixed principles as to what
would be relevant to determining whether proceedings should be stayed
or whether to order the parties to engage in ADR process. Instead, the
approach is that the court should take into account all the circumstances
of the case, including the nature of the ADR procedure in question, when
considering whether a particular process is or is not likely or appropriate
for the purpose of achieving the important objective of bringing about a
fair, speedy and cost-effective solution to the dispute and the
proceedings, in accordance with the overriding objective.
The Bar Council, intervening, submitted (at para.61) that the following
factors were relevant to the exercise of the court’s discretion:
(i)the form of ADR being considered;
(ii)whether the parties were legally advised or represented;
(iii)whether ADR was likely to be effective or appropriate without
such advice or representation;
(iv)whether it was made clear to the parties that, if they did not
settle, they were free to pursue their claim or defence;
(v)the urgency of the case and the reasonableness of the delay
caused by ADR;
(vi)whether that delay would vitiate the claim or give rise to or
exacerbate any limitation issue;
(vii)the costs of ADR, both in absolute terms, and relative to the
parties’ resources and the value of the claim;
, (viii)whether there was any realistic prospect of the claim being
resolved through ADR;
(ix)whether there was a significant imbalance in the parties’ levels
of resource, bargaining power or sophistication;
(x)the reasons given by a party for not wishing to mediate: for
example, if there had already been a recent unsuccessful attempt at
ADR; and
(xi)the reasonableness and proportionality of the sanction, in the
event that a party declined ADR in the face of an order of the Court.
The Master of the Rolls noted the observation by Dyson LJ in Halsey that
he found “it difficult to conceive of circumstances in which it would be
appropriate to exercise ...” a power to order unwilling parties to mediate
but did not agree with it. He said:
“Moreover, I would not go so far. Experience has shown that it is
extremely beneficial for the parties to disputes to be able to settle their
differences cheaply and quickly. Even with initially unwilling parties,
mediation can often be successful. Mediation, early neutral evaluation and
other means of non-court-based dispute resolution are, in general terms,
cheaper and quicker than court-based solutions. Whether the court should
order or facilitate any particular method of non-court-based dispute
resolution in a particular case is a matter of the court’s discretion, to
which many factors will be relevant.”
The Court of Appeal stated that these matters, those mentioned by Mr
Churchill about the internal disputes’ procedure and the Halsey factors (at
[16]–[35]) were “…likely to have some relevance” and added: “But other
factors too may be relevant depending on all the circumstances.”
Mills and Reeve Trust Corp Ltd v Martin [2023] EWHC 654 (Ch) and Jones v
Tracey [2023] EWHC 2256 (Ch) are examples of cases where the court has
carefully considered all of the circumstances of the case in the context of
ADR.
The Civil Procedure News has commented on Churchill and how it will no
doubt mark the starting point of further development of the civil courts’
approach to ADR:
“Having identified a range of potential relevant factors in Churchill, it is
inevitable that the courts will now be called upon to consider how they,
and other factors, may apply to different situations and to different forms
of ADR process. Given the sheer range of ADR processes, from
negotiation, through mediation, Arb-Med, Med-Arb, collaborative law,
Executive Tribunals, to ENE and non-binding adjudication, their relevance
, and application will vary, as it will depending on the substantive issues,
the status of the parties and whether they are legally represented, and
the effect that the cost and time of any proposed process may have. It
may well be the case that parties and the courts will draw on experience
from other jurisdictions, where court-mandated ADR is well-established, to
develop the approach to such factors, as well as to identify other relevant
ones. Useful guidance could, for instance, be drawn from the US Federal
Judicial Center’s Guide to Judicial Management of Cases in ADR (2001),
sections II to IV, which provides clear and balanced guidance on a range of
relevant matters concerning the selection of cases for ADR and the
selection of the optimum ADR process. Such considerations, taken against
the background of the integration of mediation into the small claims
process and the increasing promotion of digitised pre-action processes
aimed at promoting settlement, will no doubt see an increasing emphasis
on consensual settlement. The clear guidance the Court of Appeal has
given on how mandated ADR can be carried out consistently with the right
to fair trial ought, however, to ensure that such increased enthusiasm and
promotion of ADR is kept within proper boundaries and cannot be
deployed or developed so as to frustrate or deny access to justice.” (Civil
Procedure News C.P.N. 2024, 1 (Jan), 10-14)”
One aspect of the Churchill judgment which may fall to be clarified by the
courts sooner rather than later is the weight that should be placed on the
merits of the case when considering whether to encourage, stay for, or
order ADR. “The merits of the case” is one of the tests referred to in
Halsey as being relevant to the costs question of whether a party had
behaved unreasonably in refusing ADR (para.16). To some, a case or a
defence with excellent merits is a reason not to deploy ADR whereas to
others that is a positive indication that some form of ADR should be used
(see para.14-19). Also, views on merits are by their nature subjective. As
the court noted in Stoney-Andersen v Abbas [2023] EWHC 2964 (Ch) at
[56]:
“It is a commonplace that both sides are told by their lawyers that they
will win. But they cannot both be right. Indeed, sometimes, both sides are
wrong.”
In two post Churchill cases the court has contemplated parties mediating
for a second time where the first mediation did not result in resolution:
Heyes v Holt [2024] EWHC 779 (Ch) (at [50]) and Francis v Pearson,
[2024] EWHC 605 (KB) (at [87]–[92]).
The Court of Appeal in Churchill further held that in the circumstances of
this case, a stay of the proceedings would not be granted, but suggested
UNIT 3
Introduction
14-1
The Court of Appeal in Churchill v Merthyr Tydfil CBC [2023] EWCA Civ
1416 overturned Halsey v Milton Keynes General NHS Trust [2004] EWCA
Civ 576, which had been regarded as the leading case on alternative
dispute resolution (ADR) since 2004. In a landmark judgment, the Court of
Appeal held that the court could lawfully stay proceedings for, or order,
the parties to engage in an ADR process subject to the provisos that the
order made did not impair the very essence of the claimant’s right to
proceed to a judicial hearing, and was proportionate to achieving the
legitimate aim of settling the dispute fairly, quickly and at reasonable
cost. The judge in the court below had relied on well-known passages from
Halsey, but it was held that these were not part of the essential reasoning
in that case. Churchill is dealt with in further detail in para.14-7 below. It
should be noted that Churchill is not authority for the court having power
to mandate a binding ADR process. Such a process, like arbitration, would
not satisfy the caveats on the power articulated by the Court of Appeal.
The power of the court to order ADR–Churchill
14-11
The Master of the Rolls, in delivering the judgment of the Court of Appeal
in Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416, made it clear that
the court can in fact order what he described as non-court-based dispute
resolution. Before the appeal was heard it was apparent that Halsey was
likely to be reviewed by the Court of Appeal, and seven organisations,
including The Law Society, The Bar Council and several ADR organisations,
intervened.
When Japanese knotweed encroached onto his property Mr Churchill
commenced proceedings against the local council who owned the
neighbouring land. The Council sought to stay proceedings on the grounds
that he had not used its corporate complaints procedure. The Deputy
District Judge dismissed the application for a stay holding that he was
bound to follow Dyson LJ’s statement in Halsey that:
“to oblige truly unwilling parties to refer their disputes to mediation would
be to impose an unacceptable obstruction on their right of access to the
court”
,. The fact that the case concerned an internal complaints procedure,
rather than an ADR procedure involving a third party neutral such as a
mediator, may be the reason why the judgment refers to the court being
able to order a “non-court-based dispute resolution procedure” rather than
“ADR”.
The Court of Appeal held that the court could lawfully stay proceedings
for, or order, the parties to engage in a non-court-based dispute resolution
process subject to these provisos: that the order made did not impair the
very essence of the claimant’s right to proceed to a judicial hearing and
was proportionate to achieving the legitimate aim of settling the dispute
fairly, quickly and at reasonable cost. The Master of the Rolls reasoned
that the passages from Dyson LJ’s judgment in Halsey which had been
relied upon by the Deputy District Judge were not part of the essential
reasoning in that case (were obiter) and had not bound him to dismiss the
Council’s stay application.
The Court of Appeal, however, did not lay down fixed principles as to what
would be relevant to determining whether proceedings should be stayed
or whether to order the parties to engage in ADR process. Instead, the
approach is that the court should take into account all the circumstances
of the case, including the nature of the ADR procedure in question, when
considering whether a particular process is or is not likely or appropriate
for the purpose of achieving the important objective of bringing about a
fair, speedy and cost-effective solution to the dispute and the
proceedings, in accordance with the overriding objective.
The Bar Council, intervening, submitted (at para.61) that the following
factors were relevant to the exercise of the court’s discretion:
(i)the form of ADR being considered;
(ii)whether the parties were legally advised or represented;
(iii)whether ADR was likely to be effective or appropriate without
such advice or representation;
(iv)whether it was made clear to the parties that, if they did not
settle, they were free to pursue their claim or defence;
(v)the urgency of the case and the reasonableness of the delay
caused by ADR;
(vi)whether that delay would vitiate the claim or give rise to or
exacerbate any limitation issue;
(vii)the costs of ADR, both in absolute terms, and relative to the
parties’ resources and the value of the claim;
, (viii)whether there was any realistic prospect of the claim being
resolved through ADR;
(ix)whether there was a significant imbalance in the parties’ levels
of resource, bargaining power or sophistication;
(x)the reasons given by a party for not wishing to mediate: for
example, if there had already been a recent unsuccessful attempt at
ADR; and
(xi)the reasonableness and proportionality of the sanction, in the
event that a party declined ADR in the face of an order of the Court.
The Master of the Rolls noted the observation by Dyson LJ in Halsey that
he found “it difficult to conceive of circumstances in which it would be
appropriate to exercise ...” a power to order unwilling parties to mediate
but did not agree with it. He said:
“Moreover, I would not go so far. Experience has shown that it is
extremely beneficial for the parties to disputes to be able to settle their
differences cheaply and quickly. Even with initially unwilling parties,
mediation can often be successful. Mediation, early neutral evaluation and
other means of non-court-based dispute resolution are, in general terms,
cheaper and quicker than court-based solutions. Whether the court should
order or facilitate any particular method of non-court-based dispute
resolution in a particular case is a matter of the court’s discretion, to
which many factors will be relevant.”
The Court of Appeal stated that these matters, those mentioned by Mr
Churchill about the internal disputes’ procedure and the Halsey factors (at
[16]–[35]) were “…likely to have some relevance” and added: “But other
factors too may be relevant depending on all the circumstances.”
Mills and Reeve Trust Corp Ltd v Martin [2023] EWHC 654 (Ch) and Jones v
Tracey [2023] EWHC 2256 (Ch) are examples of cases where the court has
carefully considered all of the circumstances of the case in the context of
ADR.
The Civil Procedure News has commented on Churchill and how it will no
doubt mark the starting point of further development of the civil courts’
approach to ADR:
“Having identified a range of potential relevant factors in Churchill, it is
inevitable that the courts will now be called upon to consider how they,
and other factors, may apply to different situations and to different forms
of ADR process. Given the sheer range of ADR processes, from
negotiation, through mediation, Arb-Med, Med-Arb, collaborative law,
Executive Tribunals, to ENE and non-binding adjudication, their relevance
, and application will vary, as it will depending on the substantive issues,
the status of the parties and whether they are legally represented, and
the effect that the cost and time of any proposed process may have. It
may well be the case that parties and the courts will draw on experience
from other jurisdictions, where court-mandated ADR is well-established, to
develop the approach to such factors, as well as to identify other relevant
ones. Useful guidance could, for instance, be drawn from the US Federal
Judicial Center’s Guide to Judicial Management of Cases in ADR (2001),
sections II to IV, which provides clear and balanced guidance on a range of
relevant matters concerning the selection of cases for ADR and the
selection of the optimum ADR process. Such considerations, taken against
the background of the integration of mediation into the small claims
process and the increasing promotion of digitised pre-action processes
aimed at promoting settlement, will no doubt see an increasing emphasis
on consensual settlement. The clear guidance the Court of Appeal has
given on how mandated ADR can be carried out consistently with the right
to fair trial ought, however, to ensure that such increased enthusiasm and
promotion of ADR is kept within proper boundaries and cannot be
deployed or developed so as to frustrate or deny access to justice.” (Civil
Procedure News C.P.N. 2024, 1 (Jan), 10-14)”
One aspect of the Churchill judgment which may fall to be clarified by the
courts sooner rather than later is the weight that should be placed on the
merits of the case when considering whether to encourage, stay for, or
order ADR. “The merits of the case” is one of the tests referred to in
Halsey as being relevant to the costs question of whether a party had
behaved unreasonably in refusing ADR (para.16). To some, a case or a
defence with excellent merits is a reason not to deploy ADR whereas to
others that is a positive indication that some form of ADR should be used
(see para.14-19). Also, views on merits are by their nature subjective. As
the court noted in Stoney-Andersen v Abbas [2023] EWHC 2964 (Ch) at
[56]:
“It is a commonplace that both sides are told by their lawyers that they
will win. But they cannot both be right. Indeed, sometimes, both sides are
wrong.”
In two post Churchill cases the court has contemplated parties mediating
for a second time where the first mediation did not result in resolution:
Heyes v Holt [2024] EWHC 779 (Ch) (at [50]) and Francis v Pearson,
[2024] EWHC 605 (KB) (at [87]–[92]).
The Court of Appeal in Churchill further held that in the circumstances of
this case, a stay of the proceedings would not be granted, but suggested
